Cause of Muddled Middle?

Doug is generally correct. Better stuff usually equals better sound. Room treatment doesn't work a miracle, only provides the opportunity to get the best from what you have. I also agree that in your case I'd look o upgrade the speakers.

I'll second Kr4's reply. Assuming that the room is OK and that the speakers have enough space to breathe, my next step would be to try and listen to the speakers in another room/system. Take them over to a friend's house and plug 'em in.
So first step, check the room and speaker set up, second step, check the speakers. Then report back if the problem still exist.

Thanks for all of the responses. I do need to improve the room as it has too many naked hard surfaces. I've also considered electrostatic speakers. I auditioned a set of Martin Logan ESLs that had very nice separation although I didn't have any of my own music with me at the time.

I also considered upgrading my cables to Clear Day Shotgun or Double Shotgun cables. These are both solid silver conductors.

I'm not familiar with your gear. One thing I'm thinking after seeing pictures of your speakers, would be to swap the left and right speakers. I'm mentioning this because of the offset tweeters. It doesn't cost anything to try this, so I figure give it a try.

If you listen to Martin Logan speakers, bring your own music, as it should help. I myself, and a lot of others find them to be lacking in dynamics, or something to do with the way they crossover their panels with their woofers. Of coarse, they still have a lot of happy owners though.